Small businesses employ approximately half of the private sector workforce and contribute more than $500 billion to the Australian economy each year. They are essential for Australia’s prosperity. 

ASIC assists small businesses by providing the information they need to operate lawfully, and by taking enforcement action against directors or companies when the law has been contravened.

In the period 1 October to 31 December 2024 enforcement action was taken by ASIC against:

• four company directors through disqualification – two for the maximum five years
• one director charged for making misleading statements to ASIC
• one director sentenced for making false statements to ASIC, and
• 58 individuals for 107 offences in failing to assist registered liquidators following the collapse of their companies.

Criminal prosecutions and administrative actions were also taken against directors for:

• failing to maintain proper books and records
• failing to lodge tax returns
• failing to ensure the companies paid their statutory debts including tax bills, workers compensation and land taxes
• insolvent trading
• failing to assist liquidators, and
• lodging false and misleading documents with ASIC.

The failure of these directors to meet their statutory obligations adversely impacted many small business creditors across a range of industries. 

Small business owners can take practical steps to protect their interests such as maintaining financial records to track the health of the business, keeping up to date about their company’s financial position and performance and ensuring their company can pay its debts on time.

Company directors should seek professional advice if they are uncertain about their legal obligations or have concerns about their company’s finances. It’s critical to be proactive and seek help early by engaging a professional adviser such as an accountant, registered liquidator or lawyer.

Director disqualifications

In addition to the recent five-year disqualification periods handed down to Constandinos Ganatzos (refer 24-242MR), Mary Makeny (refer 24-259MR) and a four-year disqualification period for Allan Caratti (24-291MR), ASIC also disqualified Ian Thomas Griggs from managing corporations for two years on 20 November 2024. Mr Griggs was involved in the failure of four companies in the hospitality industry. The four failed companies owed in excess of $4 million to creditors.

In disqualifying these directors, ASIC relied on supplementary reports lodged by certain liquidators after ASIC approved funding from the Assetless Administration Fund. The liquidators of Mr Griggs’ companies were Jarvis Archer of Revive Financial and Barry Taylor and Todd Gammel of HLB Mann Judd.

Directors may be disqualified from managing a corporation for a maximum of five years. They are listed on ASIC’s public banned and disqualified persons register and can face criminal charges if they don’t comply with the disqualification order. Directors can seek a review of ASIC’s decision by the Administrative Review Tribunal.

Criminal prosecutions

On 27 November Jye Dilin Menzies-Clifton appeared in Mount Druitt Local Court, Sydney. He is charged with two counts of making misleading statements in a document lodged with ASIC. ASIC alleges that while director of a company which operated a Sydney gym, Mr Menzies-Clifton submitted a form to close the company which contained declarations that the company had no outstanding liabilities, and that all the members of the company agreed to the deregistration, while knowing those statements to be false (refer to 24-260MR).

On 13 December, Benjamin Molloy was sentenced to a recognisance release order under section 20(1)(b) of the Crimes Act 1914 (Cth), with a fully suspended sentence of 12 months’ imprisonment on the condition he be of good behaviour for two years. Mr Molloy pleaded guilty to two counts of making false statements to ASIC pursuant to sections 1308(1) and 1308(2) of the Corporations Act. Her Honour Magistrate Hartnett described the offending as ‘objectively serious’ where the offending was ‘squarely in the context of family violence’, which was used by Mr Molloy to ‘facilitate a structure of some complexity that promoted [his] lifestyle and the operation of [his] business interests’ (refer to 24-282MR).

Assistance for external administration

Registered liquidators can request assistance from ASIC in circumstances when directors, officers and individuals related to an entity in external administration fail to comply with legislative requirements, including the failure to provide books and records to the liquidator and the failure to complete a report on company activities and property (ROCAP).   
 
For the period of 1 October 2024 – 31 December 2024, ASIC prosecuted a total of 58 individuals for 107 offences in failing to assist registered liquidators, with a total of $342,400 in fines and $6,692 in costs. Proving the ROCAP as well as all company books and records, allows the liquidator to obtain better information about events leading up to their appointment and assist the liquidator in their investigations, asset recoveries, and complying with their obligations to report to creditors and to ASIC.

Background

Section 206F of the Corporations Act 2001 allows ASIC to disqualify a person from managing corporations for a maximum period of five years if, within a seven-year period, the person was an officer of two or more companies, and those companies were wound up and a liquidator provided a report to ASIC about each of the company’s inability to pay its debts.